Winnipeg, Manitopa
September 20,  2001

UGG announced today that it posted net income of $11.1 million for the fourth quarter of its fiscal year, bringing annual net income to $11.7 million.

"We've taken strides by improving the bottom line significantly in the face of dire predictions for our industry," said Brian Hayward, UGG's Chief Executive Officer. "We are pleased that our focus and discipline are resulting in several record results."

UGG's earnings before interest, taxes and depreciation (EBITDA) grew to a record $64.1 million-five percent above the previous record. Cash flow of $39.9 million was 11% above the previous record (and 38% above last year). Net income of $11.7 million was the second best ever-and on par with the previous record if unusual items are taken out of the picture.

"Managing expenses while maintaining our focus on farmer and food processing customers has enabled UGG to persevere in spite of current conditions," said Hayward. "At the same time, current rates of return are still not acceptable, and the challenges of the past two years - low grain prices and adverse weather conditions - are still part of our operating environment."

UGG's balance sheet strengthened considerably, with the adjusted leverage ratio declining from 53% to 40%. Spending on new construction and acquisitions has slowed following completion of the infrastructure renewal plan in the country and planned limitations on capital expenditures.

Year-to-date operating income for grain operations grew 82% to $27.9 million. Lower operating expenses and recovering margins reduced the impact of slightly lower grain volumes at country elevators. Handling at terminal elevators increased 4% to 3.4 million tonnes.

Poor weather conditions on much of the prairies limited growth on input sales and forced prices downward resulting in lower margins in Crop Production Services. A decline in canola acreage - a key product line for UGG's Proven Seed group - adversely affected income for the year. Despite the negative impact of these external factors, operating income showed a modest improvement of $0.96 million for a year-to-date income of $13.4 million

Livestock Services continues to post strong results. Operating profit improved by 25% to $11.4 million for the year and fourth quarter operating income was double that of the prior year. Increased sales, stable margins and the acquisition of the assets of Pro Form Feeds have all contributed to this growth.

Farm Business Communications operating profit decreased 7% to $1.4 million, due to decreases in advertising and circulation revenues.

UGG earnings per share before unusual items were $0.91 in fiscal 2001, a dramatic increase of $0.85 from the $0.06 cent earnings per share posted in 2000.

"The 2001 fiscal year was historic for UGG," said Hayward. "The company posted 'best ever' results, which should be viewed in light of market and competitive circumstances. UGG also decided to meld its future with another company-through the prospective creation of Agricore United. While UGG's own return on equity remains below target, the synergies achievable through the merger will be the catapult for a quantum leap in future performance."

UGG is one of western Canada's largest agribusiness firms. Founded in 1906, the Winnipeg based company is diversified into grain merchandising, crop input sales and distribution, livestock production services and farm business communications. UGG is publicly traded on the Toronto Stock Exchange under the symbol "UGG". For further information on UGG, contact company web sites at www.ugg.com or www.ugginvestor.com 

Company news release
N3813